Dow surge likely to lead Asian markets higher this week

Many indicators to watch out for in Asian region

Strong rallies on Wall Street following a robust jobs report in the US on Friday is likely to boost sentiment in Asia.

The Dow Jones Industrial Average rose 440.53 points to close at 25,335.74, while the Nasdaq 100 - made up of the 100 largest companies in the Nasdaq composite - also reached a record high.

The US economy added 313,000 jobs last month, much higher than consensus estimates of a gain of 205,000 jobs. Wages, meanwhile, grew less than expected, rising 2.6 per cent on an annualised basis.

Mr Marvin Loh, senior global market strategist at BNY Mellon, said the US report is very positive for an economy that is often thought to be in the late stages of a recovery.

More importantly, the additional jobs were created without any acceleration in wages.

"While the nuances of the report will likely be debated among the Federal Open Market Committee (FOMC) when they next meet on March 20 to 21, we don't think it changes their short-term trajectory for rate hikes. At this point, there are near full odds of a rate hike in March, and strong confidence that there will be at least three hikes throughout the year," Mr Loh said.

Ms Jingyi Pan, market strategist at IG, expects the market to focus on economic indicators this week, particularly US inflation data. Other closely watched data releases due in the US include retail sales, industrial production and housing starts.

Mr Mark Tinker, head of AXA IM Framlington Equities Asia, believes that bond yields look to be in an uptrend as quantitative easing unwinds and a degree of normalisation returns to interest rates. Equity markets are still trending up, supported by growing cash flow.

This week also brings a slew of indicators to watch in the Asian region. China's data sits in the spotlight, with last month's retail sales, industrial production and fixed asset investments out on Wednesday.

"Amid the rather mixed set of numbers we have seen thus far, the market is not holding strong expectations with industrial production expected to moderate to 6.2 per cent year-on-year for the collective first two months of the year," said Ms Pan.

Other potentially market-moving releases include Japan's machine orders on Wednesday and in Singapore, January retail sales today, manpower survey tomorrow and February non-oil domestic exports on Friday.

Asian markets could benefit from the new Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which replaced the Trans-Pacific Trade Partnership (TPP) after the US pulled out. While the gains from the new deal will be smaller without the US, Moody's said the agreement "will still boost exports and incomes for all members and help to sustain reform efforts in a number of countries, a credit positive".

The credit agency adds that Malaysia will see a change of just over 3 per cent in real income under CPTPP from its 2030 baseline, the highest out of all 11 member nations. Second highest is Singapore, with under 2 per cent change in real income.

In local news, THSC Investments plans to make a voluntary conditional cash offer of $0.50 for each of mainboard listed Tat Hong Holdings' shares. It is a 2 per cent premium over the crane operator's last traded price at$0.49 a share on Thursday.

Keppel Fels has secured a contract from Awilco to construct a mid-water semi-submersible drilling rig for harsh environment use, worth US$425 million (S$560m).